How to build credit without a credit card may seem daunting. However there are effective strategies that you can use to quickly establish and strengthen your credit score.
In this article, we’re going to share some of the strategies while also answering some of the most common questions that we receive on the topic.
This article is part of our free series on credit cards in the United States, including how to get a US credit card for foreign nationals, which you can access by clicking here right now.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- How to Build Credit Without a Credit Card?
- How Do I Build Credit for the First Time?
- Frequently Asked Questions
- Ready to Open Accounts With Banks in the USA?
How to Build Credit Without a Credit Card?
How to build credit without a credit card will depend on your residency status, the reason for building credit, and the credit-building options that you can realistically access. In most cases, a combination of strategies can be used to build credit faster while also increasing available credit, which also positively impacts your credit score.
Three initial examples of how to build credit without a credit card include:
- Obtaining and using a secured credit card
- Being added as an authorized user on an existing card
- Obtaining a charge card and then converting to a credit card
These three options are easily accessible to most residents in the United States. However, foreign non-residents will likely have a harder time unless they spend a lot of time in the US, have friends and family there, and have a good understanding of US banking.
That said, with the right information, even foreign non-residents can obtain secured credit cards from certain US banks. Likewise, they can even obtain a charge card which can then convert to a traditional credit card later.
However, in most cases, a US tax identification number (SSN or ITIN) is required to obtain secured and charged cards in the United States.
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How Do I Build Credit for the First Time?
How you build credit for the first time will depend on the resources available to you and the time and effort you want to spend on building credit. That said, in most cases, residents of the United States can start building credit quickly by obtaining specific products and services that help build credit.
For example, obtaining a credit card that is targeted at first-time card holders or young adults. Alternatively, individuals can apply for a secured card that allows the holder to build credit without needing to be approved for a credit line. Likewise, being added as an authorized user to someone else’s card is a fast and effective way to start building credit.
That said, building credit is also important for people with low credit scores. With this in mind, let’s take a look at two ways that individuals can start to improve their credit scores.
Personal Loans
A personal loan can help individuals build credit (or improve their credit) by allowing them to consolidate their outstanding debts to a centrally managed, often lower-interest, debt facility.
Line of Credit
A line of credit with a low-credit facility can be used to help consolidate debt. Similar to a personal loan, lines of credit typically have lower interest rates than credit cards, allowing cardholders to pay off cards with a line of credit and lower their effective interest rates.
Frequently Asked Questions
Below are four of the most common questions we receive from people looking into how to build credit without a credit card. If you have further questions you would like to ask our team, don’t hesitate to get in touch.
Can You Have a Credit Score Without a Credit Card?
Yes, you can have a credit score without a credit card. In fact, many products, services, and other credit products report to the credit bureaus, ranging from personal lines of credit to car loans and mobile phone plans. With this in mind, there are a number of strategies that people can use to have a credit score without a credit card.
How Can I Build Credit History at 18?
How you can build a credit history at 18 will depend on the resources available to you and the willingness of other individuals to assist you. This is because, in most cases, an 18-year-old will have difficulty accessing various credit products without a cosigner. Likewise, one of the fastest ways for an 18-year-old to build a credit history is to join their parent’s credit card as a user.
In all cases, a young person must be diligent about paying their credit on time, maintaining a low credit utilization score, and focusing on building a strong credit history.
Do You Need a Credit Card to Build Credit?
No, you do not need a credit card to build credit. In fact, many credit card issuers will not issue a credit card unless you already have a credit score. With this in mind, many people choose to use other strategies that can help establish credit before they apply for credit cards. Alternatively, they may choose to apply for cards that are specifically for individuals with low or no credit history.
How Did I Build Credit Without a Credit Card?
How you build credit without a credit card depends on the specific products and services you have access to. For example, it could be because you had access to other credit products like a mortgage, personal loan, line of credit, or other credit products that also report to a credit bureau. Alternatively, you may have been an authorized user on someone else’s credit card, or you had a billable service that reports to credit bureaus like a postpaid phone service.
Can I Build Credit With a Debit Card?
No, you cannot build credit with a debit card. However, many banks that issue debit cards to their customers also issue secured credit cards, which function in a similar way. With this in mind, a secured credit card is often one way that you can quickly start to build a credit history in the US.
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